ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have made “significant progress” on the first review of a $7 billion loan program Islamabad secured last year, the IMF mission chief said on Friday.
The South Asian country, which has faced an economic meltdown in recent years, is treading a long path to economic recovery under the $7 billion IMF program it secured in Sept. last year.
An IMF mission visited Pakistan from Feb. 24 till Mar. 14 to analyze Islamabad’s progress on key conditions as part of the first review of the facility. A successful review will result in the release of around $1 billion as second installment under the program.
In a statement on Friday, IMF Mission Chief Nathan Porter said the two sides made significant progress toward reaching a staff-level agreement on the first review under the 37-month program, and they would continue policy discussions virtually to finalize the review over the coming days.
“Program implementation has been strong, and the discussions have made considerable progress in several areas including the planned fiscal consolidation to durably reduce public debt, maintenance of sufficiently tight monetary policy to maintain low inflation, acceleration of cost-reducing reforms to improve energy sector viability, and implementation of Pakistan’s structural reform agenda to accelerate growth, while strengthening social protection and rebuilding health and education spending,” Porter said.
Pakistan’s Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb have previously said they were confident of meeting targets of the IMF program.
The South Asian country was able to build some trust with the IMF by completing a short-term, nine-month program last year. Previous loan programs in Pakistan ended prematurely or saw delays after the governments at the time faltered on meeting key conditions.
Pakistan also seeks to secure an additional $1.5 billion loan from the IMF to deal with climate-related issues under a Resilience and Sustainability Facility (RSF) arrangement.
“Progress has also been made in discussions on the authorities’ climate reform agenda, which aims to reduce vulnerabilities from natural disasters-related risks, and accompanying reforms which could be supported under a possible arrangement under the Resilience and Sustainability Facility (RSF),” Porter said.
“The IMF team is grateful to the Pakistani authorities, private sector, and development partners for fruitful discussions and their hospitality throughout this mission.”
Pakistan, IMF make ‘significant progress’ on first review of $7 billion program — IMF mission chief
https://arab.news/cwub8
Pakistan, IMF make ‘significant progress’ on first review of $7 billion program — IMF mission chief
- The development comes as an IMF mission concluded its weeks-long visit to Pakistan to review Islamabad’s progress on key conditions under the program
- Progress has also been made in discussions on Pakistan’s climate reform agenda, which aims to reduce natural disasters-related vulnerabilities, IMF says
IMF Executive Board to review $1.2 billion loan disbursement for Pakistan today
- Pakistan, IMF reached a Staff-Level Agreement in October for second review of $7 billion Extended Fund, climate fund program
- Economists view IMF bailout packages as essential for cash-strapped Pakistan grappling with a prolonged macroeconomic crisis
ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) is set to meet in Washington today to review a $1.2 billion loan disbursement for Pakistan, state media reported on Monday.
Pakistan and the IMF reached a Staff-Level Agreement (SLA) in October for the second review of a $7 billion Extended Fund Facility (EFF) and the first review of its $1.4 billion Resilience and Sustainability Facility (RSF).
The agreement between the two sides took place after an IMF mission, led by the international lender’s representative Iva Petrova, held discussions with Pakistani authorities during a Sept. 24–Oct. 8 visit to Karachi, Islamabad and Washington D.C.
“The International Monetary Fund’s (IMF) Executive Board is set to meet in Washington today to review and approve $1.2 billion in loan for Pakistan,” state broadcaster Pakistan TV reported.
Pakistan has been grappling with a prolonged macroeconomic crisis that has drained its financial resources and triggered a balance of payments crisis for the past couple of years. Islamabad, however, has reported some financial gains since 2022, which include recording a surplus in its current account and bringing inflation down considerably.
Economists view the IMF’s bailout packages as crucial for cash-strapped Pakistan, which has relied heavily on financing from bilateral partners such as Saudi Arabia, China and the United Arab Emirates, as well as multilateral lenders including the IMF, World Bank, Asian Development Bank and Islamic Development Bank.
Speaking to Arab News last month, Pakistan’s former finance adviser Khaqan Najeeb said the $1.2 billion disbursement will further stabilize Pakistan’s near-term external position and unlock additional official inflows.
“Continued engagement also reinforces macro stability, as reflected in recent improvements in inflation, the current account, and reserve buffers,” Najeeb said.
Pakistan came close to sovereign default in mid-2023, when foreign exchange reserves fell below three weeks of import cover, inflation surged to a record 38% in May, and the country struggled to secure external financing after delays in its IMF program. Fuel shortages, import restrictions, and a rapidly depreciating rupee added to the pressure, while ratings agencies downgraded Pakistan’s debt and warned of heightened default risk.
The crisis eased only after Pakistan reached a last-minute Stand-By Arrangement with the IMF in June 2023, unlocking emergency support and preventing an immediate default.
